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Thailand mortgages

Buying Property in Thailand? Make sure you get the right advice first!

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 4th July 2019* | Published: 4th June 2019

Buying property in Thailand is usually more complicated than buying locally. You’ll need to consider a number of risks and might need to work out how to get a mortgage for a property in Thailand. The good news is we get lots of enquiries about overseas mortgages, and the even better news is that the brokers we work with are fully equipped to answer these enquiries.

This article deals with the following topics:

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How do mortgages in Thailand work?

There’s one ubiquitous rule: Foreigners can only own 49% of a property purchased in Thailand (a percentage based on the building and the land it occupies). Even if you’re married to a Thai, the deed of the property must be transferred to your spouse rather than exist in your own name.

That’s because the Government of Thailand refuses to allow foreigners claim to an iota of its land.  In all cases, Thais own 51% of property (i.e. the building and its land combined) bought by foreigners. Condominiums and apartments - as we’ll see later - are a slight exception.

What types of Thailand real estate mortgages are there?

Thai's have seven different types of property titles. The most secure and that which is out of reach of foreigners is the Chanote title (no.4) with its full ownership rights.

For foreigners, the best you can get is the Condominium Title Deed which is similar to the Chanote title in that it gives you 100% ownership - only of a building, not the land it sits on.

How do you get mortgages for expats in Thailand?

Since land in Thailand is so hard to get, as an expat you have two options:

  • Either enter into a 30-year lease that can be renewed up to three times, or
  • Launch your own Thai Limited Purchasing Company and buy property through that. Native-born Thais have to own 51% of that company.

How to get a mortgage in Thailand

There are options available, including...

A 30-year lease

Foreigners who lease land in Thailand for 30 years tend to do so through a Thai citizen, usually their spouse. This means the Thai owns the property, while all the foreigner does is lease it.

The Thai cites the expat as the guarantor for the loan, which means responsibility for the loan fully devolves on you.

You should receive the Chanote title (no.4) with the emblem of a red eagle, giving you full ownership rights, including the ability to do as you wish with the loan.  If you want that contract renewed once it expires, make sure you stipulate so in the lease. The lease can be extended up to three times, 30 years each.

Enlist legal assistance to make sure the lease gives you (through proxy) secure ownership. Call us for help so we can refer you to our experienced overseas brokers.

Purchase an apartment through a self-funded Thai Purchasing Company

Set up your own Thai Limited Purchasing Company for buying real estate. Then, go ahead and buy the property through that organisation.

Note: Your startup has to be 51% Thai-owned, giving you, as owner, less than half of the shares. Some expats have found a way around this by persuading these Thai investors to sign over their shares to them. In this case, Thailand’s Ministry of Interior will scrutinise your business.

If you go down this route, it’s crucial to receive up-to-date legal advice. make an enquiry and we’ll refer you to one of the international brokers we work with.

Buying a villa or house in Thailand

Houses, villas, townhouses and detached homes are all called “land” in Thailand, which means they’re connected to the land under them and, therefore, can only be purchased by proxy of a Thai. The same rules that apply to property as land in its literal sense.

In other words, while 49% of the property belongs to you, the majority of that land/property belongs to the Thai.

Residences such as these can be purchased through marriage, or through setting up a Thai Limited Purchasing company, as described in the section above.

If you purchase the residence through marriage to a Thai, note that the home reverts to your spouse if you divorce.

Buying an apartment or condominium in Thailand

It’s the condominiums or apartments that are most open to foreigners and where you can actually possess 100% ownership rights. That’s because all you own is the unit. The Thai owns the land on which the units are based. So, the results are the same: You own 49% of the unit; Thailand retains 51% of the land.

When buying a condo or apartment, you’ll receive the document called the Condominium Title Deed. It’s branded with the green eagle and comes with a Tabien Baan, or registration book, that  stipulates you can rent and sell the condo or apartment, as you please.

Can I get a Bangkok property mortgage on an apartment?

Yes, potentially. Most expats prefer to buy their apartments or condos in Bangkok and Phuket, where the purchasing system is easier than elsewhere in Thailand. At the same time, make sure you seek legal assistance and that the apartment is in good condition. Contact Online Mortgage Advisor and we will connect you with one of the expert overseas brokers we work with.

Getting a mortgage in Thailand for foreigners

Few foreigners are allowed mortgages from banks in Thailand.

That’s because:

  • You have to be married to a Thai to get a loan - and can prove that marriage with full documentation.
  • Or you have to either work in Thailand for at least a year.
  • Or live in Thailand as a permanent resident.

In all cases, you have to be at least 20 years old to apply.

If you do secure that mortgage, most Thai banks typically loan you 40-80% of the property’s asking price up to 10 years.

Thailand’s mortgages come with far higher interest rates than usual (around 6-8%) and follows a far more intensified, rigorous procedure.

What documents are needed for a mortgage in Thailand?

To get a Thailand mortgage, you’ll need to show the relevant documents to the lender, including the following:

About yourself

  • Your passport,
  • Alien Registration Book or Permanent Residence book, depending on your status
  • Proof of income and certified letter from employer (some lenders request a copy of your professional license, too)
  • Most recent payslips and 3- months backlog of bank statements and/ or tax filing documents
  • Visa documentation
  • Some lenders request birth certification and change of name (if relevant), while others may ask for items, like work references, details of previous bank accounts, and marriage/ death/ divorce certificates of spouse, if applicable.

For business owners -

  • Most recent financial statements and/ or last year’s tax forms
  • VAT records
  • Proof of business registration (usually certificate)
  • Net working capital of the past six months

When it comes to the property, lenders typically request the following:

  • The Sale and Purchase Agreement
  • Proof of Foreign Quota Availability
  • A copy of the Title Deed to the condo or apartment
  • Housing registration record

In general, lenders want to see you have at least three times the income to cover your loan. Naturally, your credit history is taken into account, too.

Getting an international loan for a mortgage in Thailand

Really, it may be easier, faster and cheaper for you to get the loan the international way - and that is what most expats do, particularly if their income comes from outside Thailand.

How do I get the best mortgage rates on a Thailand property?

Go through this channel and make sure you speak to an overseas mortgage broker first!

You’ll likely find interest rates more favourable in Britain than they are in Thailand.

Again because the property will either be leased, or, in the case of a condo or apartment, signed over to you as a foreigner, the Thai Government expects you to pay with foreign currency.

Your best bet, then, is to approach a lender in your home country and seek capital to send back to Thailand.  International banks tend to provide up to 70% of the home value with loans up to 30 years.

Since providers change over the years, you’d want to give us a call for access to specialist brokers who arrange overseas mortgages for properties in Thailand every day.

What else do I need to know if I’m getting a mortgage for a property in Thailand?

If you’re making repayments in Singapore Dollars (SGD), the lender must tell you if the exchange rate fluctuates by more than 20%.

These Thai mortgage rate fluctuations could affect your ability to meet your future mortgage commitments.

To protect borrowers, lenders must offer you the option to repay the mortgage in another currency.

What property fees will I pay in Thailand?

The main cost of the property is the least of it. Other fees that you, as the buyer, will need to pay include:

  • Transfer registration fee - Usually about 2% of the property's purchase price. It tends to be split between seller and buyer.
  • Business tax (Capital gains tax) - That’s 3.3% of the property value, or the property's highest appraised value.
  • Real estate agent fees - Some regions have such a structure. Most foreigners like places like Bangkok and Phuket, where real estate agents are free. (In these places, agents are paid a commission by the landlords).
  • Legal fees - A negotiable THB 20,000 -THB 30,000.
    Withholding tax - This levy increases depending on how long you hold the property
  • Rental cost - There are two kinds:
    • (a) The House & Land Tax, where 12.5% is annually deducted from your rental income and
    • (b) An annual deduction of 10-37% of your rental income, with the rate matching your rental income.
  • If you purchase property through a business, you may have business fees that are 33% of the cost. The Thai government relaxes this cost if you purchase condos.

Good news: Most of these fees can be negotiated. Better news: There’s no annual property tax.

How do you go about getting insurance for your property in Thailand?

Most overseas brokers would recommend having home insurance. For condos, Thai home insurers recommend you include the following:

  • Coverage for fire - Fire outbreaks occur frequently in Thailand
  • Storms - storms are a regular hazard, too.
  • Water damage - water pipes tend to burst causing serious water damage.

Most Thai mortgage experts would advise that you add coverage for earthquakes, too.

What risks should I be aware of when buying property in Thailand?

  • Tax: Make sure you account for all the tax you’ll be liable to pay, both in the UK and in the country where you have the property. Also have an escrow clause put in your lease to stipulate you’re not paying paying porter tax on the condo. (In Thailand, the only one who pays property tax is the building’s owner, in this case the Thai).
  • Check the paperwork: Make sure that you have all the necessary permissions, licences and planning consents before you sign any form of contract or agreement. If you go the leasing every 30 years route, make sure you receive the Chanote title. Read the lease carefully. Also make sure  deposit conditions are spelt out, where the seller refunds the deposit if the property contradicts its descriptions. (The seller will request 10-15% deposit of the price of the purchase, refundable if either you or the seller fail to follow through).
  • Exchange rate changes: Even a small change to the exchange rate could drastically affect the value of your purchase. This could make a property - or your mortgage repayments, unaffordable overnight.
  • Due diligence: Inspect the property and ask other condo owners to make sure you're satisfied with your investment. If you’re not sure which questions to ask or are uncertain, make an enquiry with us.
  • Your will: The Thai property may not necessarily pass to your children/ benefactors after your death. The way to assure this is to have a duplicate will signed in your home country where you include the Thai property.

Get independent legal and financial advice

Always seek legal advice from a lawyer who is independent of everyone else involved in the deal including:

  • The seller
  • Developer, and
  • The estate agent

Ensure your lawyer is fluent in both English and the local language, and that they understand property law in the country where you’re buying plus how it relates to non-residents.

If you’re appointing a UK legal firm, check that they’re registered with the Law Society in the UK and specialise in international transactions and property conveyancing.

Where can I find a Thailand mortgage calculator?

You will come across Thai mortgage calculators on some international lender’s websites and other financial hubs, but you should keep in mind that mortgage calculators will only give you a rough idea of how much you can borrow and the rates you will end up with.

That’s because every lender carries out different calculations when assessing you for a mortgage, some more sophisticated than others, and this is why you might find that results vary from one Thailand mortgage calculator to another.

The best way to get an accurate idea of how the mortgage you’d qualify for is to make an enquiry and speak with an expert overseas broker. The advisors we work with can pair you up with the lender whose calculator is most likely to return favourable results for a borrower with your needs and circumstances.

Speak to a Thailand mortgages expert

If you have questions about buying property in Thailand or about getting a mortgage in Thailand and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 4th July 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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